Sunday, July 12, 2009

System Trading Conclusion

Conclusion to trading system
Before I leave you to go off and start trading your system, you should understand the mindset of an investor. The investor/trader should be looking at past results and figuring out what's the best guess expectation, what's the maximum down swing in that test, what's the sample size, worst case scenario, best case scenario and how do I adapt to that? The trading system is enough on it's own, but if you want to improve you need to test this stuff because things will change. Test previous results, and test the results as you do it. What you want to do is go through all the test of various methods and estimate the potential results several times over, tweak the exit strategy within that system and go back and test again.. Whether you have a stock screening software that tracks the results, or a trading station that allows advanced backtesting the point is you need to see how minor changes in your entire strategy effect the estimated results, the estimated downswings, etc.
If you do this, you should be able to be a winning investor with an excellent trading system.